Corporations Keep Quiet on Fraud [1]

CFO INSIGHT.COM

By Rebecca Brace 20.8.2012

Over one-third of global financial professionals have worked in an organisation in which serious financial wrongdoing has taken place, according to a survey published by EuroFinance. But while the impact of serious fraud can be significant, the research highlights the obstacles that may be preventing companies from proactively addressing this area.

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More than half (57%) of respondents were of the opinion that whistleblowers risk damaging their career. In addition, when serious financial wrongdoing had been detected, 42% of corporate respondents said that the perpetrators had been fired and the issue was hushed up. In contrast, 76% of bank respondents said that the culprits had been prosecuted.

While disclosure requirements and full protection for whistleblowers are widely supported in principle, the reality can be more complex. On the one hand, despite the processes a company may have in place to combat fraud, a whistleblower will often have their own motives questioned and, if their name is in the public domain, they could well struggle to find another position in the future. On the other hand, although companies have little to lose by taking a tough stance on instances of minor fraud, full disclosure of more major incidents can have an impact on the company’s reputation.

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